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On September 7, a tweet spread on X: “<a href="https://xpertsstudio.com/harmony-shuts-down-over-ai-fears-but-will-it-be-safer-on-ethereum/” title=”Harmony shuts down over AI fears, but will it be safer on Ethereum?”>Ethereum‘s next major upgrade will allow users to pay transaction fees with stablecoins instead of ETH.”
The comment section immediately exploded. Ethereum community member Leo Lanza responded within an hour with a key correction: “The protocol layer will not accept USDC as Gas. Ethereum’s Gas settlement is still ETH, it’s just that from the user’s perspective, they are paying with USDC.”
What is the truth?
Frame Transactions: What is a transaction broken down into?
At the Ethereum Core Developers Meeting (ACDE) on August 27, EIP-8141 was officially upgraded from “Considered for Inclusion” (CFI) to “Scheduled for Inclusion” (SFI), entering the formal schedule for the 2027 Hegotá hard fork. This is Ethereum’s next major protocol upgrade following Glamsterdam later this year.
The full name of EIP-8141 is “Frame Transactions,” jointly proposed by 10 authors including Vitalik Buterin. Its core change can be summarized in one sentence: breaking a single transaction from “an indivisible block of operations” into up to 64 programmable “frames,” each responsible for different logic—verifying identity, paying Gas, executing operations—each independent yet atomically bound.
After the split, the most direct change is: The account sending assets and the account paying Gas no longer have to be the same.
A payment application can cover the Gas fee for the user; a DeFi protocol can bundle the Gas cost into its own service fee; a wallet can deduct an equivalent amount from the user’s stablecoin balance and then use its own ETH reserves to settle the on-chain fee.
The user experience is “paying Gas with USDC,” but what the protocol layer receives, from start to finish, is ETH.
The inherent cost of each frame transaction is approximately 12,000 gas, with an additional ~475 gas per extra frame. This overhead is negligible compared to the flexibility it unlocks.
Vitalik wrote in an X post on September 6 that work on Frame “has been quietly progressing over the past few months.” However, it should be noted that EIP-8141 is still in Draft status, and the specific specification design may still change, with at least a year remaining before actual activation.
How is this different from ERC-4337?
If you think “Gas sponsorship” sounds familiar, your intuition is correct.
ERC-4337 was deployed on the Ethereum mainnet as early as March 2023. Through a combination of smart contract wallets, Bundlers, and Paymasters (Gas sponsors), it achieved a user experience similar to EIP-8141: users sign UserOperations, Bundlers package and submit them, and Paymasters pay the ETH Gas fee for the user. To date, ERC-4337 has supported over 40 million smart accounts and over 100 million UserOperations.
EIP-8141 aims to replace the architectural flaws of ERC-4337, with significant functional overlap between the two.
The problem with ERC-4337 is that it is “bolt-on.” The entire system operates outside the Ethereum protocol: UserOperations go through an independent alt-mempool, Bundlers are off-chain roles, and the EntryPoint contract is a singleton central node. This means that every operation executed via ERC-4337 has a Gas cost approximately 20%-40% higher than a regular EOA transaction. Furthermore, the Bundler ecosystem is highly concentrated, with the top three operators (Pimlico, Stackup, Coinbase) handling about 78% of UserOperation volume.
EIP-8141’s goal is to move this capability from “an additional layer on top of the protocol” into “the protocol itself.” Frame Transactions are a native Ethereum transaction type (type 0x06), requiring no Bundlers, no alt-mempool, and no EntryPoint contract. Gas sponsorship, key rotation, multi-signature, social recovery, and even quantum-resistant signature schemes can become native capabilities of the Ethereum account system, rather than peripheral functions implemented individually by wallet providers.
Will the demand for ETH really be weakened?
Here is the core issue.
The anxiety triggered by that tweet stems from an instinctive chain of reasoning for many: Users don’t need to hold ETH → Users don’t need to buy ETH → Demand for ETH collapses.
Every link in this chain is questionable.
EIP-8141 changes the distribution structure of ETH demand, not the total amount.
Under the current model, every user wanting to perform any operation on Ethereum must first buy some ETH to keep in their wallet for Gas fees. This means the Gas demand for ETH is scattered across millions of individual accounts, each holding perhaps only tens of dollars worth of ETH, with a large amount of capital sitting idle as “inactive Gas reserves.”
What EIP-8141 (and the already operational ERC-4337 Paymaster) changes is this: these scattered Gas demands are consolidated into the hands of a few wallet operators, Paymaster service providers, and application developers. They need to hold large amounts of ETH to fulfill their sponsorship obligations, and because their Gas consumption frequency is much higher than that of ordinary users, their ETH turnover rate is also higher.
To use an analogy: this is like a highway switching from manual toll booths to an ETC system. Before the switch, every driver on the highway needed to carry change; after the switch, drivers don’t need cash, but the ETC operator needs to settle large sums with the highway group. The total toll revenue of the highway hasn’t changed, but the distribution of “who holds the coins” has shifted from millions of wallets to the capital pools of a few dozen operators.
What validators ultimately receive is still ETH. This has not changed at the protocol level in any way. The base fee burning mechanism of EIP-1559 is also unaffected; the base fee for each transaction is still denominated in ETH and burned.
Therefore, a more precise description is: EIP-8141 may reduce the retail demand for “every user must buy a little ETH,” but simultaneously concentrates this demand among professional infrastructure operators, creating larger volume, higher frequency wholesale procurement.
The Real Value Capture Migration
If EIP-8141 is activated as planned in 2027, the Gas value chain on Ethereum will become a four-layer structure:
Users hold stablecoins or other ERC-20 assets → Wallet or Paymaster service providers collect users’ stablecoins and centrally purchase ETH → Applications cover Gas costs using their own revenue or user fees → Validators receive ETH and execute the burn.
In this chain, who are the beneficiaries and who are the losers?
The biggest beneficiaries are the application layer.
For a DeFi protocol or payment application, the previous user conversion funnel included a step called “go buy some ETH and put it in your wallet,” which deterred a large number of potential users who already held stablecoins. EIP-8141 eliminates this friction point, directly improving the conversion rate from “registration” to “first transaction.” Ethereum officials estimate that ERC-4337 brought 20 million new smart accounts in 2024 alone, with a 7x annual growth rate. The native EIP-8141 could further accelerate this trend.
Stablecoin issuers also benefit. If Gas sponsorship becomes the norm, and users can complete all on-chain operations by default holding USDC or USDT, stablecoins upgrade from “passive storage assets” to “active Gas fuel.” In the process of Paymasters purchasing ETH on-chain to pay for Gas, they effectively create a continuous exchange flow from stablecoins to ETH.
For ETH, this is a structural migration from “retail holdings to institutional holdings.” Total demand may not necessarily decline (it could even increase due to higher user conversion rates), but the holder profile will fundamentally change. Previously, millions of ordinary users each held small amounts of ETH; in the future, dozens of Paymaster and wallet operators will centrally hold large amounts of ETH.
This means the price formation mechanism for ETH will also change. Scattered retail buying is like a drizzle—continuous but weak, not creating price shocks; concentrated institutional buying involves batch orders, potentially creating more significant buying pressure during peak Gas demand periods, but also potentially leading to more concentrated selling during low demand periods. ETH’s volatility structure may therefore change, becoming more akin to the wholesale pricing model of commodities.
Source: www.panewslab.com